In a recent decision, the High Court considered whether the managing director of a company was entitled to represent it in legal proceedings. The Court considered whether it would be equitable to allow directors, who have separate legal personalities to the company, act on its behalf.
Details of the case
- In this case, the bank issued proceedings against the company for possession of lands secured under a mortgage. The managing director sought permission to represent the company and defend the proceedings on its behalf. He claimed that due to the company’s financial circumstances, it was unable to afford legal representation.
- The traditional position in Ireland is, unless there are rare and exceptional circumstances, a lay person cannot represent a litigant in proceedings. As a company has separate legal personality to that of its directors, this has the effect of prohibiting directors or shareholders of a company from representing it in any proceedings.
- The Court considered the effect on the bank if the managing director was allowed to represent the company. It found that the director would personally have no exposure to potential costs regardless of his conduct in defending the company. On the other hand, the bank would incur what would most likely be irrecoverable costs in meeting the defence.
- The Court rejected arguments put forward by the managing director that under the European Charter of Fundamental Rights, he was entitled to represent the company in proceedings. The Court also rejected his argument that the proceedings came within the category of rare and exceptional circumstances as it is common that a company does not have the funds to retain legal representation.
This decision is a helpful restatement of the law that a director or shareholder of a company cannot represent it in legal proceedings. This can be significant from a bank’s perspective as it means directors or shareholders of impecunious companies will have little chance of bringing or defending proceedings on the company’s behalf.
Allied Irish Banks plc v Aqua Fresh Fish Limited  IEHC 184